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Employment NewsFlash
COBRA Or Obamacare? New Guidance from DOL

May 30, 2014
Client Alert

Health insurance continuation options often arise as part of any discussion regarding a departing employee. And most employers and employees understand that coverage may be available through COBRA or similar state laws, depending on the size of the employer. Increasingly, however, employers are fielding questions from departing employees about alternative options for coverage available in the health insurance marketplace created by the Affordable Care Act.

Recent publications by the U.S. Department of Labor (DOL) offer an explanation of the options afforded by the health insurance marketplace to employees who become COBRA-eligible. The DOL’s latest set of Frequently Asked Questions explains the distinctions between COBRA and marketplace coverage. New COBRA model general and election notices also expand on the description of marketplace coverage and expressly advise employees that marketplace coverage may cost less. Some plan administrators have already begun revising their forms to incorporate the revised model notices, although the model notices were issued as part of still-pending regulations and may be subject to further revision before finalized.

Although employers should not advise employees which option to choose, a general understanding of the alternatives available may aid employers during difficult conversations with employees and in the development of employee transition strategies. Designated benefits personnel or plan administrators should also be consulted for more specific information.

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